John B. Sanfilippo & Son, Inc.: Including Restructuring Costs, Net Income for the Current Second Quarter Increased by 159% over Net Income for the Second Quarter of Fiscal 2007

Business Wire, Feb 11, 2008

* $2.9 million increase in unfavorable labor and efficiency variances over the second quarter of fiscal 2007, which was primarily related to the shut down and start up costs for production lines that were moved from the existing facilities and installed in the new Elgin facility during the quarter;

* $1.0 million in estimated redundant manufacturing expenses as production activities occurred at the existing Chicago area facilities while the manufacturing spending in the new Elgin facility reflected increased production levels during the quarter;

* $0.5 million in external contractor charges that were related to the acceleration of the equipment move from the existing Chicago area facilities to the new Elgin facility; and

* $0.3 million for inventory write-downs related to the items that will be eliminated in the third quarter.

The current second quarter gross profit margin, as a percentage of net sales, increased in all distribution channels except the contract packaging channel when compared to the gross profit margin for those channels for the second quarter of fiscal 2007. The increase in the gross profit margin in the quarterly comparison was driven mainly by price increases for peanuts, walnuts and mixed nuts, and declines in acquisition costs for other major commodities. The current year to date gross profit margin increased from 8.1% for the second quarter of fiscal 2007 to 11.3% after considering costs of approximately $10.4 million for shut down and start up for the equipment move, redundant manufacturing expenses and equipment moving expenses. Gross profit margin improved in all distribution channels and in sales of all major commodities except pecans in the year to date comparison.

Total selling and administrative expenses for the current quarter decreased to 8.6% of net sales from 8.7% of net sales for the second quarter of fiscal 2007 primarily because of lower shipping, distribution and broker commission costs, which were offset partially by increased compensation costs and consulting fees. For primarily the same reasons, total selling and administrative expenses, as a percentage of net sales, for the current year to date period decreased to 9.1% from 9.6% for the same year to date period in fiscal 2007. Total selling and administrative expenses also included consulting fees of $0.2 million and $1.0 million for the second quarter and year to date period, respectively, which were related primarily to the item rationalization and store door migration initiatives.

Interest expense for the second quarter of fiscal 2007 increased to $2.6 million from $1.8 million for the second quarter of fiscal 2007. Interest expense for the current year to date period was approximately $5.4 million compared to $3.5 million for the first two quarters of fiscal 2007. Increased short-term debt levels and higher interest rates led to the increase in interest expense in both the quarterly and year to date comparisons.

Inventories on hand at the end of the current second quarter declined by $19.1 million or 11.5% when compared to the value of inventories on hand at the end of the second quarter of fiscal 2007. Pounds of raw nut input stocks decreased by approximately 22.8 million pounds or 26.3% when compared to the quantity of raw nut input stocks on hand at the end of the second quarter of fiscal 2007. The weighted average cost per pound of raw nut input stocks increased by 7.4% in the quarterly comparison mainly as a result of higher peanut and walnut acquisition costs.